Friday October 29, 2010 - 19:18:12 GMT
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Weaker Dollar Spurs Gold Rally
The weaker U.S. Dollar has renewed interest
in the long-side of the gold market. With stocks flat and bonds losing value,
traders are beginning to look at the long side of the gold market as a viable
Technically, GCZ broke through a 50% level
at $1351.80 on its way to the .618 retracement level at $1360.40. Upside momentum could drive this market into
a downtrending Gann angle at $1366.10.
The U.S. Dollar is trading mostly lower
against the major currencies under thin conditions. News that the U.S.
economy is still sputtering along has traders confident the Fed will implement
another round of quantitative easing at its meeting on November 2 and 3.
Traders for the most part are still betting
on the short-side of the Dollar. Although the Fed may disappoint with the size
of its allocation after this meeting, investors expect the economy to remain
weak. This means stimulus is likely to continue to flow from the Fed for some
time until the economy can get back on track. All of this is adding up to more
weakness for the Dollar.
At the mid-session, the December Australian
Dollar is trading higher, boosted by demand for higher risk assets and
short-term oversold conditions. Technically, the Aussie is finding support inside
of a retracement zone at .9722 to .9658. An uptrending Gann angle comes in at
.9710. This helps form an important support cluster at .9722 to .9710.
Upside momentum is building in the December
Japanese Yen which could drive this currency pair through the high for the week
The December Canadian Dollar is currently
testing resistance on a 50% level at .9815. A failure to hold this level could
drive this market up to .9860.
The daily December Euro is in a downtrend,
but the coiling action is indicating impending volatility. 1.4080 is the new
top, 1.3733 is the new bottom. Watch for a breakout on either side as this
coiling formation develops.
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